Income Tax Appellate Tribunal - Delhi
Ch. Devi Lal Co-Op. Sugar Mills Ltd., ... vs Department Of Income Tax on 6 July, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : B : NEW DELHI
BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER
AND
SHRI J.S. REDDY, ACCOUNTANT MEMBER
ITA No.4165/Del/2011
Assessment Year : 2008-09
ACIT, Vs. Ch. Devi Lal Co-op. Sugar Mills
Sonepat Circle, Ltd.,
Sonepat. Vill. Ahulana,
Teh Gohana, Distt. Sonepat,
Sonepat.
PAN : AAATC3088Q
(Appellant) (Respondent)
Assessee by : Shri Manoj Kumar, CA
Revenue by : Shri Vikas K. Suryawanshi, Sr.DR
ORDER
PER A.D. JAIN, JUDICIAL MEMBER
This is an appeal filed by the department for Assessment Year 2008-09 against the order dated 06.07.2011 passed by the ld. CIT (A), Rohtak, taking the following sole ground:-
"On the facts and circumstances of the case the ld. CIT (A) has erred in deleting addition of Rs.15,20,000/- made under the head selling and distribution expenses as the addition was made by the Assessing Officer after failure on the part of the assessee to furnish justification for increase of more from two times in the selling and distribution expenses of Rs.48,96,028/- as compared to the preceding year of Rs.23,69,230/-."
2. As per the assessment order, the assessee Co-operative Sugar Mill had debited ` 48,96,028/- to its Profit & Loss account during the year, under the head 'Selling & Distribution Expenses.' Observing that 2 ITA No.4165/Del/2011 there was an increase of more than two times in these expenses as compared to the last year figure of ` 23,69,230/- and the assessee did not furnish any justification for these expenses, nor produced any bills or vouchers with regard thereto, the Assessing Officer disallowed an amount of ` 15,20,000/- out of the expenses debited.
3. The ld. CIT (A) deleted the disallowance, observing that the Assessing Officer had made the disallowance without any basis in a casual manner only on the ground of increase of more than two times in the expenses, as compared to the earlier year, without verifying and pointing out the specific disallowables, whereas the books of the assessee are subject to audit by the Registrar, Co-operative Societies and also by a Chartered Accountant u/s 44AB of the IT Act.
4. The Ld. DR, challenging the impugned order, has contended before us, reiterating the grounds of appeal taken, that the learned CIT (A) has erred in deleting the disallowance correctly made by the Assessing Officer for failure of the assessee to furnish justification/bills for the more than two times increase in the 'Selling and Distribution Expenses' as compared to those in the immediately preceding assessment year.
5. The learned counsel for the assessee, on the other hand, relying on the impugned order, has reiterated the stand taken by the assessee before the CIT (A). It has been submitted that while making the disallowance, the Assessing Officer did not point out as to which expenses were being disallowed; that the increase in the expenses was due to a temporary sugar godown, of ` 14,70,600/-; that if this expenditure is kept apart, the increase in the Selling & Distribution Expenses is only of ` 10,56,198/-, which works out to an increase of 44.58%, whereas the increase in the quantity of sugar sold is 54.90%;
3 ITA No.4165/Del/2011and that four temporary sugar godowns had been made during the year to store sugar.
6. We have heard both the parties and have perused the material on record. The issue is as to whether the Ld. CIT (A) has correctly deleted the addition of ` 15,20,000/- made by the Assessing Officer under the head 'Selling & Distributing Expenses.' As per the department, the assessee had failed to furnish the justification and/or bills/vouchers supporting the increase of more than two times in the selling and distribution expenses of ` 48,96,028/- as compared to similar expenses of ` 23,69,230/- incurred in the immediately preceding assessment year.
7. The assessee is a Co-operative Sugar Mill. It procures sugar cane at the rates decided by the Government of India for producing sugar and other related products. The Assessing Officer, it is seen, made the addition on the sole basis of increase in the expenses by more than two times over similar expenditure in the immediately preceding assessment year, which, according to the Assessing Officer, remained unexplained by the assessee. However, the Assessing Officer made no mention as to which expenses were being disallowed. In the Profit & Loss Account for the year ending 31.03.2008, the selling and distribution expenses for A.Y. 2007-08 have been shown at ` 48,96,028/- and for A.Y. 2006-07, they have been shown at ` 23,69,230/-. Under the 'Selling & Distribution Expenses', the fourth entry reads as follows:-
"SELLING & DISTRIBUTION EXP.
"S.NO. PARTICULARS 2007-08 2006-07
4. SUGAR GODOWN (TEMPORARY) 1470600.00 0.00 "
4 ITA No.4165/Del/2011
8. This fortifies the assessee's stand that it was the temporary sugar godown for ` 14,70,600/- which mainly contributed to the increase in the expenses. Sans this expenditure, the increase in the selling and distribution expenses over similar expenses in the earlier year amounts to only ` 10,56,198/-. Now, this is an increase of 44.58%. Juxtaposed against this, the increase in the quality of sugar sold is 54.90%. Moreover, four temporary sugar godowns were made during the year to store the high production of sugar and this was done on invitation through tenders published in the newspapers.
9. A copy of the Profit & Loss Account for the year ending 31.03.2008 has been filed at page 6 of the assessee's paper book before us. A copy of the assessee's balance sheet as on 31.03.2008 is at APB-7. A copy of Annexure-K to the aforesaid Profit & Loss Account, showing the selling and distribution expenses, is at APB-9.
10. The department has not been able to refute the afore-discussed facts, as patent on record.
11. Then, it is also not disputed that the books of account of the assessee are subject to two audits, i.e., by the Registrar, Co-operative Societies, as also by a CA, u/s 44AB of the IT Act.
12. The Ld. CIT (A) has duly taken into consideration all the facts, as well as the assessee's explanation regarding the increase in the expenses and it is only thereafter that the Ld. CIT (A) deleted the addition made by the Assessing Officer, by passing a well reasoned speaking order. We hereby confirm the same, rejecting the grievance sought to be raised by the department. The Ld. CIT (A) was correct in holding that the addition made by the Assessing Officer, which was 5 ITA No.4165/Del/2011 without verification or pointing out the specific disallowables, was unjustified and without basis.
13. In the result, the appeal filed by the department is dismissed.
The order pronounced in the open court on 27.07.2012.
Sd/- Sd/-
[J.S. REDDY] [A.D. JAIN]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated, 27. 07.2012.
dk
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
TRUE COPY
By Order,
Deputy Registrar,
ITAT, Delhi Benches